“Economics,” Ludwig von Mises (1966, 252) famously wrote, “in speaking of entrepreneurs, has in view not men, but a definite function.” The entrepreneurial function is to be the driving force of the market economy. The entrepreneur acts on the basis of changing circumstances in market conditions to produce the accommodating adjustments in exchange and production. The ceaseless quest for profits by those eager entrepreneurs drive the market system toward realizing the gains from trade and the gains from innovation. The relentless pursuit of profit is in this Misesian analysis of the market process the critical factor in how markets work. Profits and losses are ever-present features of a functioning market economy only because of changing circumstances that result in discrepancies that require adjustments.
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